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by Victor Cianni

Chief Investment Officer at Alpian

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You know we love songs that pump you up. The month’s pick was popularized when the movie Scarface was released in 1983, and you find in it all the electronic sounds and rhymes of the 80s. “Push It to the Limit” by Paul Engemann can turn you into a Duracell rabbit in an instant.

So, what kind of “razor’s edges”, “tops”, “limits”, “points of no return” are we talking about?

First, the gap between what investors think central banks will do and what central bankers tell us they are doing is widening.

While it is expected that rates will go higher in May, pushing economies further in their retrenchments, market participants are betting that the Federal Reserve (which is the central bank that has risen rates the most aggressively),will stop after that and will even cut rates by 2% from the current level by the beginning of the year.

Divergences of opinions usually don’t end well. For now, it is a bit too soon to tell who is right. Especially after the conflicting economic data points that were released recently.

On the one hand, the inflation’s measure most scrutinized by the US central bank came in hotter, suggesting that the fight against higher prices is not over. On the other hand, the GDP number, which gives the pulse of the economy, came in weaker, suggesting that the economy is cooling down.

Second, U.S. debt continues to venture into uncharted territory.

Debates on the debt ceiling are raging as the U.S. government again reached the maximum amount allowed to borrow to meet its obligations.

As a reminder, the U.S. government can borrow money to pay its bills when its spending exceeds its revenues, and it never really restrained itself from doing so in the past few decades. To increase the debt limit, the government needs Congressional approval, and a nerve-wracking process starts. If the request is not approved in time, it could have disastrous consequences.

In 100 years of history, Congress was always able to agree on a suspension or an increase of the ceiling. But the underlying challenge remains: is that amount sustainable, especially now that the cost of servicing it has dramatically increased?

Third, companies have started reporting their financial results for the past quarter.

It seems there is also a limit here in terms of how well businesses can perform in a challenging economic environment. So far, the results are mixed and similar to what we observed in the previous quarter. Higher rates have also pushed some banks on the edge.

Fourth, the global geopolitical landscape is becoming more tense.

Tectonic shifts between economic blocs are ongoing. De-dollarization is becoming a prominent theme. US-China relations are on a dangerous path.

Limits often exist to be pushed and when this happens, it often creates opportunities for investors. But there are some points of no return that shouldn’t be crossed. That’s why on our side, we remain prudent with the management of our portfolios.


“The market at a glance” series summarizes the most important events of the financial industry on a monthly basis. Join Alpian’s CIO, Victor Cianni, on a musical trip combining market insights to the rhythm of popular songs.

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About the author

Victor has more than 13 years of experience in wealth management. He has assisted many individuals, families, and institutions in their financial journey throughout his career, either by providing tailored advice on their investments or by managing assets on their behalf. He occupied a number of key positions within the investment divisions of CA Indosuez, Lombard Odier, and Citi Private Bank. He holds an Engineer’s degree in Bioinformatics and Modeling from the Institut National des Sciences Appliquées of Lyon, and he is a certified FRM. In his free time, Victor loves scientific readings and collecting rare books.

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